Sport, from football to basketball, fund investments continue to grow

The concomitance, therefore, of several factors, including the visibility of team sports offered by the Olympics, has led private equity funds to almost double their investments in the sector over the past decade, with over $10 billion invested in the first nine months of 2024, according to PitchBook data.

Investimenti dei private equity nei club sportivi

Andamento del numero di operazioni e degli ammontari

Fonte PitchBook

The search for investment opportunities in sport led, for example, Cvc Capital Partners to invest USD 300 million in the International Volleyball Federation in 2021, contributing to the creation of Volleyball World. The new capital allowed for the introduction of new competitions, such as the Volleyball Nations League (VNL), which in turn further boosted volleyball's popularity to the extent that participation in the VNL in 2024 increased by 13% compared to 2023 and 33% compared to 2022, reaching a total of 751,000 spectators. In addition, Volleyball World TV recorded a 21% increase in live viewing and a record 103% growth in viewing of the women's finals.

The transition from football to the padel now seems natural for many former players. The same thing is happening in investments. Qatar Sports Investments acquired, for example, the World Padel Tour from its organisers, Damm, in 2023, unifying the professional padel circuit under the new name Premier Padel, now regulated by the International Padel Federation. MCH Private Equity has also invested in the sport through its Spain Oman Private Equity Fund, financing All For Padel, an Adidas-licensed equipment brand.

David Rubenstein, co-founder of Carlyle and co-owner of the Baltimore Orioles, said of the potential for returns on investment in sports: 'It is very difficult to buy a sports team and lose money. This is probably true in the US and less so in Europe. Indeed, analysts have pointed out that sports teams did not see a slowdown in merchandising even during the pandemic. This allowed them to compensate for the losses in match admissions.

Comparing the returns of investments in sports clubs with the performance of the S&P500 over the past 20 years shows how the former have performed better than the latter. This has led to an increasing interest in closed-end funds. To date, the league with the largest private equity presence among team shareholders is undoubtedly the NBA, where 20 out of 30 teams have a link to funds. This is followed by the baseball league (MLB), where two-thirds of its teams are owned by funds. Major League Soccer has less investment to date due to the lower profile of football in the States, but it is also true that it has shown the highest returns in recent years.

Also playing a role in making the investment attractive is the fact that the number of clubs is limited. In the US there are only 153 major league sports franchises, counting MLB, NHL, Nfl, NBA and mls. If one then takes into account that many properties do not vary for decades, one understands how individual transactions often take place at very high multiples. Moreover, the sports sector, analysts note, operates as an effective monopoly, because strict rules limit new entries and leagues control media revenues, merchandise sales, sponsorships and athletes' salaries.

Not to mention the streaming rights of matches. Today, media rights tend to offer the most lucrative value creation lever within sports investments for private equity, contributing around 40-60% of individual league revenues. Rights for which competition is constantly growing as a result of new players entering the market. Amazon, for example, became the first streaming service to win a series of sports rights exclusives, securing the streaming rights for Thursday Night Football in a deal expiring 2033 for 1 billion per year. It is expected that the Nfl alone will generate $10 billion per year in media rights revenue from 2023 to 2033, and in 2022, the 'Big Ten' (college football's oldest conference for non-American readers) secured a seven-year $7 billion media rights deal with Fox, CBS, and Nbc. These are constant streams of recurring revenues that ensure the stability of budgets in the medium and long term. A detail that does not escape the due diligence of closed-end funds.